UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Ordinary Level

COMMERCE Paper 1 Multiple Choice Additional Materials: Multiple Choice Answer Sheet Soft clean eraser Soft pencil (type B or HB is recommended) Ruler Protractor

7100/13
May/June 2012 1 hour

*7971789311*

Additional Materials: (not provided by CIE)

READ THESE INSTRUCTIONS FIRST Write in soft pencil. Do not use staples, paper clips, highlighters, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you. There are forty questions on this paper. Answer all questions. For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully. Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet. The businesses described in this question paper are entirely fictitious.

This document consists of 11 printed pages and 1 blank page.

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2 1 People have a number of basic needs. What do these needs include? A B C D entertainment and tourism food and water insurance and medical care transport and communication

The diagram shows the costs involved in making and selling a pair of jeans.
manufacturing expenses $5

other materials e.g. zip, buttons $1 2 metres of cloth at $2 per metre

distribution expenses $1 selling expenses $2

How much value is added to the two metres of cloth in making the pair of jeans? A 3 $6 B $8 C $9 D $13

Nasir and his three partners intend to sell DVDs on the Internet and to deliver them by post. Each partner will specialise in one area of the business as shown below. Nasir Partner 2 Partner 3 Partner 4 Which task, shown as A B C D ordering and stock control sales and despatch finance and accounts

X, is likely to be undertaken by Partner 4?

advertising and website design driving a delivery van managing a retail shop supervising the workforce

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3 4 The diagrams show four occupations. Which occupation would be classified as trade?
A B

ry est es r o F rvic Se

CAR INSURANCE QUOTES

What is the chain of distribution for manufactured goods? A B C D consumer consumer manufacturer manufacturer retailer wholesaler wholesaler wholesaler wholesaler retailer consumer retailer manufacturer manufacturer retailer consumer

What is a multiple chain? A B C D a group of retailers buying from one wholesaler a group of wholesalers a large-scale retailer with many similar branches a large self-service store

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4 7 What has helped the self-service system of retailing to expand? A B C D 8 after-sales service branding delivery service the growth of credit

What is an advantage to a customer of shopping online? A B C D bulk buying convenience free delivery high quality goods

How is informal credit different from extended credit as a means of payment for goods? A B C D Goods bought are not usually of re-saleable value. Goods can be used or consumed before they are paid for. Interest is not charged if the bill is paid before a certain date. The seller of the goods usually knows the customer personally.

10 Which of the following is not a purpose of a consumer magazine? A B C D advertising new goods promoting goods that are value for money providing advice on goods and services testing a range of goods

11 In which trade is the wholesaler most likely to be eliminated? A B C D blankets bread clothes meat

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5 12 Which service does a wholesaler provide for retailers? A B C D credit information about customers debt collection maintenance of goods wide variety of goods

13 A factor is an agent who A B C D charges higher commission than other agents. guarantees to sell goods for his principal. owns the goods that he is offering for sale. sells the goods which he has in his possession.

14 The diagram represents a business transaction.

enquiry

X
statement quotation

invoice

What is the missing document A B C D advice note catalogue delivery note receipt

X?

15 What is the purpose of printing E. and O.E. on an invoice? A B C D to enable mistakes to be corrected later by the supplier to ensure that the customer does not alter the figures to give details of cash and trade discounts to show that the supplier has made an error

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6 16 The balance of a monthly statement dated 10 June is $1000. The cash discount terms are: 5 % two weeks; 2.5 % one month. When the account is settled on 28 June, how much is paid? A $25 B $50 C $950 D $975

17 A country has the following trading figures for a year. imports visible invisible $436 million $650 million visible invisible exports $478 million $620 million

What is the Balance of Trade for this country for the year? A B C D $42 million $30 million +$12 million +$42 million

18 Why does a country impose customs duties? A B C D to cover transport costs to increase imports to obtain revenue to reduce home consumption of goods

19 Which definition describes a trading bloc? A B C D a group of countries which agree to eliminate all trading restrictions with each other a group of countries which control supplies of natural resources to influence world prices a large multinational company which tries to monopolise global trade in all its products a number of companies which deal in similar products and share advertising costs

20 Why would a country introduce quotas? A B C D to increase imports to protect home industries to provide government revenue to reduce exports

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7 21 What would be a disadvantage to a business of advertising on the Internet? A B C D Advertisements are difficult to change. It is difficult for competitors to view the products offered. The design of the website is expensive. The website can be viewed anywhere.

22 This advertisement is for a vacuum cleaner.

Which method of appeal best fits the advertisement? A B C D ambition desire for an easy life feminine appeal love of a bargain

23 A point of sale display will attract customers who are A B C D ordering from mail order catalogues. surfing the Internet. using vending machines. visiting a shop.

24 Communications play an important part in assisting trade within the global economy. Which reason best explains the above statement? A B C D Communications support all commercial transactions within a country. Communications link traders in all parts of the world. Different currencies are required for overseas trade. Email can be used to communicate written messages.

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8 25 What is an example of a telecommunications service? A B C D business reply private box registered delivery voicemail

26 A farmer wants to send title deeds to his bank. Which postal service should be used for these important documents? A B C D airmail parcel post poste restante registered post

27 For which of the following would delivery by air transport be suitable? A B C D a bulk consignment of oil from the Middle East to Japan a large quantity of iron ore from Australia to Japan spare parts of a machine to be sent from London to Cape Town the daily delivery of perishable goods to a nearby town

28 What is a disadvantage of containerisation? A B C D Freight charges are low. Mechanised handling of containers saves time. Risk of theft is reduced. Specialised handling equipment is needed.

29 Which service is provided at both seaports and airports for the handling of international cargo? A B C D car hire customs inspection navigational lights runways

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9 30 What is a function of warehousing? A B C D to maintain supplies to manufacture goods to provide after-sales service to standardise goods

31 Which type of goods are stored in a bonded warehouse? A B C D goods from a particular manufacturer goods on which customs duty has not yet been paid goods produced locally before they are demanded goods produced locally for packing

32 Why do businesses use insurance? A B C D to increase sales to make a profit to protect from risk to reduce competition

33 Alpha Insurance Ltd offers house contents cover at a rate of $20 per $1000 of cover required. Those buying via the Internet get a 10 % discount on premiums. Tsvetan wishes to obtain $80 000 cover via the Internet. What is the total amount payable? A $1440 B $1600 C $1760 D $4000

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10 34 The diagram shows the main functions of a bank.

main functions

receiving deposits

transferring payments

What does A B C D

X represent?

lending money offering insurance advice providing business references safeguarding valuables

35 An ATM enables a customer to A B C D manage direct debits. obtain a loan or an overdraft. request a bank statement. transfer money to another country.

36 Which statement applies to partnerships? A B C D Their names are followed by the letters Ltd. They are owned and run by the government. They have at least two owners. They sell shares to the general public to raise capital.

37 What is a multinational corporation? A B C D a government-owned enterprise in an important industry a group of companies that exports to many countries a large company with branches all over one country a very large company with branches in many countries

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11 38 Mrs Dhar wishes to start a business. Her bank offers her a loan. The bank agrees to loan her $60 000 at a fixed interest rate of 10 % per year, providing she repays the loan and interest back in equal monthly instalments over a five-year period. What is the monthly instalment? A $500 B $1 100 C $1 500 D $5 000

39 A supermarket chain wishes to increase its sales of butter. Which action would be best? A B C D buy a new display unit find a new supplier reduce the price of butter reduce the price of margarine

40 Mariam sells CDs and DVDs. Last year, the value of her sales was $360 000. She worked out that her average stock at selling price was $20 000. What was her rate of turnover for the year? A 0.55 B 18 C 18 % D 340 000

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

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